Critical Infrastructure, Security and Resilience Highlighted in November

National Critical Infrastructure Security and Resilience Month (CISRM) kicked off on Nov. 1. The month’s initiatives address risks such as extreme weather, aging infrastructure, cyber threats and acts of terrorism. Its timing is certainly appropriate, as the effects of recent hurricanes on infrastructures in southern states and Puerto Rico continue to be assessed, as well as Northern California’s devastating wildfires and the deadliest shooting massacre in modern U.S. history.

The month was created by the Obama administration and the Department of Homeland Security (DHS) hosts CISRM in an effort to promote education and awareness of the 16 critical infrastructure sectors that are vital to public safety and national security. Its page reads:

The evolving nature of the threat to critical infrastructure—as well as the maturation of our work and partnership with the private sector—has necessitated a shift from a focus on asset protection to an overarching system that builds resilience from all threats and hazards.

A CISRM toolkit provides companies with templates and drafts of newsletter articles, blogs, and other collateral material for use in outreach efforts. Activities geared toward business owners, public entities and private citizens focus on several key themes to enhance security and resilience, including:

  • Highlighting interdependencies between cyber and physical infrastructure
  • Pointing small and medium-sized businesses to the free tools and resources available to them to increase their security and resilience through Hometown Security and the four steps of “Connect, Plan, Train, and Report”
  • Promoting public-private partnerships
  • Fostering innovation and investments in infrastructure resilience

In his proclamation of CISRM earlier this week, President Trump further committed to helping businesses invest in “needed capital and research and development by reducing burdensome regulations and enacting comprehensive tax reform.” The proclamation states:

We will also renew our Nation’s focus on ensuring that the next generation has the education and training, particularly in science, technology, engineering, and math, required to meet the known and unknown threats of the future.

Overall the United States’ infrastructure is among the top 18 in the world, according to the 2017 FM Global Resilience Index, which aggregates data to help companies identify their key supply chain risks. The U.S. continued to hold high rankings among 130 countries based on drivers in three categories: economic, risk quality and supply chain factors. The U.S. is segmented into three regions to reflect disparate natural hazards exposure:

  • Region 1, encompasses much of the East Coast, is ranked #10 in the index (a one-spot upgrade from last year)
  • Region 2, primarily the Western U.S., is ranked #18 (a three-spot upgrade)
  • Region 3, which includes most of the central portion of the country, is ranked #9 (down three places)

Although the federal government is less focused on asset protection, business owners can still get involved by safeguarding workplaces. In its October 2017 edition, CLM magazine noted that another path toward resilience involves reducing property damage caused by extreme weather and natural disasters. Literally looking to the sky is one suggestion; business and property owners should pay particular attention to their roofs in order to prevent degradation and enable them to withstand high winds.

“Property owners need to have maintenance personnel adopt and implement preventative maintenance and roof inspection programs that alert them to potential and active degradation,” wrote the authors of the article, “Time For Resilience.” “Weak links such as roof detachment, corrosion, or other damage could tear off roofing during an enhanced wind event. Such risks need to be mitigated before an event occurs.”

Ready.gov provides resources on disaster planning and management, and also has this section on Business Continuity.

Zombie Risk Management 101

An emerging risk over the past 10 years has been the rise of undead walkers, or “zombies” and their influence on supply chains, natural resources and mortality rates. These once-alive individuals thrive on human flesh and spread deadly diseases; their exploits have been well documented in California and Georgia for years on basic cable television.

Renegade armies have made significant gains in controlling the risks of these attacks and uprisings using makeshift weapons, but sadly, the supply chain is limited due to an outbreak that has been wiping out Americans.

To avoid these risks, on Halloween, encourage employees to travel in pairs in case the undead appear out of the shadows, as they often do. Their bites are infectious and pose the risk of death or even worse—you could become one of them. Should you sustain a bite, consider whether you will want to:

  • “Live on” and become a flesh-eater
  • Be placed under special quarantine
  • Be terminated on-the-spot to prevent future outbreaks and harm

As previously reported in Risk Management magazine, when considering risk management techniques for zombie encounters, such as fight or flee, it pays to plan ahead: Consider objects around you that could be used as weapons, wear shoes that can accommodate speed if fleeing is necessary and always be aware of your surroundings.

The undead do not need oxygen or blood to function, as detailed in the Zombie Survival Guide. They can thrive on land and even under water, so be sure to account for both scenarios when designing your contingency plans. If you are preparing to defend yourself or your company, it’s suggested you use a long blade or propulsion weapon and be sure to aim for the head. It is commonly believed that once its brain is pierced, a zombie should perish for good. Visit the CDC’s Zombie Preparedness page for more survival techniques and tips on how to best handle an encounter with the undead.

How Small Businesses Can Prepare for the Next Natural Disaster

As we have witnessed these past two months, Hurricanes Harvey, Irma and Maria devastated many parts of the south coast and the economies of Texas, Florida and Puerto Rico. The damage from the storms is expected to halt U.S. GDP by an entire percent. Recent estimates put the costs of recovery at around $85 billion and $59 billion for Harvey and Irma respectively.

While larger businesses have the resources to rebuild and recover, many smaller businesses do not. They will likely struggle to account for the cost of repairs, and even lose their companies in the process. According to FEMA, nearly four in 10 small businesses struck by a natural disaster are forced to permanently shut down. With more storms expected in the coming weeks as hurricane season persists through November, it is vital that small business owners prepare in the meantime.

The first step for any small business is to prepare internally. Here are three best practices that small-business owners can adopt to prepare for a future hurricane or any other natural disaster.

  1. Establish a recovery plan: Often, disaster recovery plans fall to the bottom of small-business owners’ to-do lists, especially if their business is located in an area that doesn’t typically experience high-risk weather. However, no business is immune from a harmful storm’s impact. So disaster preparedness starts with a formal plan that’s comprehensive and allows the company to quickly restore its normal operations following an emergency.
  2. Discuss your plan with all employees: It is crucial for your entire staff to be on the same page when it comes to what your disaster plan involves in order for it to be effective. So once small-business owners have a plan in place, they need to ensure that their employees know what’s included and what their responsibilities are should a natural disaster strike. Owners can share this information by emailing a copy to all employees and discussing the plan in detail at the next all-hands meeting.
  3. Back up your business’s data: Small-business owners should ensure their data is backed up both virtually and physically in a secure location. Doing so can prevent a natural disaster from turning into an even worse data loss debacle.

While following these steps can get small businesses on the right track toward hurricane preparedness, no company can be fully protected without insurance. With a plan in place, the next step is finding the right hurricane insurance plan. But there is often confusion over what proper hurricane coverage looks like.

Small businesses should take into account the specific rules and regulations of their industry when choosing an insurance plan to protect against hurricanes and other natural disasters. That said, there are two policies that are essential to businesses that need a defense against hurricanes.

Commercial Property Insurance is a policy that helps cover some of the cost to repair damages or restore your business property should a natural disaster cause harm. It is important to note, however, that many commercial property insurance policies only protect damages caused by hurricane winds, not flood damage resulting from rising water. If your business is located in an area prone to hurricanes, ask your insurance provider about “riders” (also known as endorsements), which can be added to your policy for more complete coverage.

Business Interruption Insurance is a policy that helps companies deal with the extended time (and business) they may lose as a result of hurricane damage. Often, this forced, lengthy pause in operations is what causes small businesses to permanently close, due to the high costs they incur and their inability to generate the revenue required to cover those costs. Business interruption insurance helps small businesses through by providing the funds for necessities such as taxes, loan payments, rent and salaries. Again, it is key to ask your provider exactly what a policy covers before purchasing it. Typically, business interruption insurance only protects your business if the circumstance that forced you to shut down is already covered by your commercial property policy.

This year’s Atlantic hurricane season has already been deemed the third worst on record. With more than a month to go, small businesses can ensure that they’re protected from damages through internal company policies and a thorough insurance plan. As far as hurricane insurance coverage goes, it’s crucial for businesses to do their research and find the policies that will provide the best protection. Although developing these plans will take time and effort, the risks mitigated and money saved as a result will be well worth it in the long run.

Tips for Managing a Hurricane Claim

Despite early predictions of a mild 2017 Atlantic hurricane season, the latest forecasts reflect the likelihood of more named storms than originally anticipated. If that is not ample motivation for risk managers to double-check their hurricane preparation, then the reality that it only takes one major storm to generate a widespread disaster should be sufficient to warrant a review of their claims preparation.
This process will not only help spot potential gaps in your insurance, but also any issues in your planning that may affect the amount and delay the timing of a claim recovery. Based on recent experience, here are some tips for hurricane claims preparation and management.

Conduct a thorough review of your property insurance. Start by checking your deductible. After a loss, the first question risk managers often get from leadership is: “What’s our retention?” You also need to see if your policy has a blanket or percentage deductible. If the latter, is it a percentage of total insured value (TIV)? Do separate deductibles apply to physical damage and business interruption? Double-check your business interruption deductible. A 2% deductible on a business interruption loss equals seven days of self-retention (365 days x 2%).

In reviewing your policy, check the definitions of covered perils. Look for specific references to “storm surge,” “named windstorm” and “flood.” You’ll also want to make sure your policy covers costs to protect and preserve insured property that sustains physical damage and addresses business interruption losses when a facility is closed to preserve or protect property.

Check fee coverage for claims preparation. In a catastrophe, you may need to retain an outside claims consultant to manage your claim; this coverage—standard in some policies and optional for a nominal surcharge in others—comes in handy for complex claims.

Risk managers also shouldn’t overlook the extended period of indemnity, which gives policyholders additional time after a damaged property is restored to regain market share. And don’t miss assessing how your business interruption coverage addresses payroll; most policyholders want coverage that treats payments to hourly workers as a fixed expense (ordinary payroll), especially during catastrophe events.

During your policy review, be sure not to miss the opportunity to pre-select your adjuster. Designate an adjuster in your insurance policy and meet with them and your insurer’s claims director or examiner before any loss. Besides informing them about your company’s operations and claim strategy, a meeting helps structure the claims process.

List your claims team in your emergency response plan. Creating a team in advance—including claim advocate, restoration company, forensic accountant, engineers and building consultants—will mean they can be mobilized immediately following a major loss event.

After a loss event, communicate with key internal stakeholders. Keep your c-suite, operations, procurement and legal teams fully informed of your loss situation and claim process. And be sure all employees have ample instruction. They will need guidance for setting up loss accounts, invoicing, tracking internal labor, inventory, fixed asset ledgers and on any purchases to help mitigate the loss. They also need to understand the sensitive nature of any discussions with insurance company representatives.

Act quickly to assess the loss. Immediately evaluate the extent of property damage and obtain recommendations on temporary repairs and remediation needed to preserve and protect property. Show the adjuster the full scope of the loss so an appropriate reserve is established.

Designate a key member of your claims team to coordinate, manage and communicate activities of emergency resources, remediation, restoration vendors, environmental specialists and other providers involved in your claim. This encompasses all site inspections and remediation, timelines, target dates, ownership of issues and accountability, and facilitates expedited reviews of damaged inventory.

Work closely with your insurer throughout the loss adjustment process, as well, to negotiate partial payments based on expected short-term expenditures.

Get outside help for complex losses. By bringing expertise and special resources, such as drones and other technology, to determine extent and scope of loss, prepare accurate damage and business interruption assessments, claim experts can make a significant difference in your recovery.

Large-scale catastrophes can involve delays in insurance adjustment and elongated downtime, which can have enduring and widespread negative consequences for an enterprise. With careful planning, risk managers can help their organizations achieve faster and more complete recoveries.

For more information on hurricane preparedness and natural catastrophe planning, visit: http://www.aon.com/disaster-response/